Housing Crisis to End in 2012 ???

By: Krista Franks

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

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About Ryan&Real Estate

Born and raised in Fort Worth, after graduating high school I began my quest for self-employment. I started out in Cosmetology. Learning how to wrap, perm, color and cut. I began practicing, but with the crash of the economy my family and I had to move and I had to leave my beloved clients. After the slow rise of normalcy in day-to-day life, a career in real Estate fell in my lap. As I begin my new life as an agent, I'm constantly searching for more and more information, and what better way to share my findings, than by blogging about it? Enjoy!
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